As the White House celebrated the July 4 passage of the One Big Beautiful Bill Act, President Donald J. Trump paused to commemorate one specific aspect of measure: the creation of new savings accounts that will give each newborn baby with a Social Security number, born between 2025 and 2028, $1000 that will grow in an account established by the government.
Days later, Connecticut State Treasurer Erick Russell stood before an audience of his own to praise a different program aimed at investing in the state’s youth. Since 2023, Connecticut has run a “baby bonds” program, giving $3,200 to babies born to families eligible for the state’s Medicaid program HUSKY.
Children can draw on the accounts once they turn 18, and can use the saved up money to pay for college, start a business, or make a down payment on a home. So far, more than 33,000 babies in the state are eligible for the program, the first state-level baby bonds program in the nation.
Viewed from a distance, Trump accounts and Connecticut’s baby bonds could be viewed similarly. But as he spoke last month, Russell sought to make clear that the programs couldn’t be more different.
“Baby bonds were created to narrow Connecticut’s generational wealth gap by investing directly in children from low-income families, whereas Trump Accounts advantage families who already have the ability to save, while leaving behind those who don’t,” Russell said.
It’s a distinction the treasurer says is deeply important. As so-called “Trump Accounts” have drawn considerable attention in recent months, supporters have argued that the accounts will help build the financial futures of America’s children, a goal shared by supporters of baby bonds initiatives.
But critics of the federal program say it falls short, arguing the savings program may not be as effective as more traditional accounts like 529 savings or a Roth IRA. And baby bonds proponents in places like Connecticut say Trump accounts won’t address economic disparities.
“It’s important to note that baby bonds are really about addressing wealth inequality,” Russell said in a recent interview. “And that is not what the Trump accounts are designed to do.”
A new federal savings account
Trump accounts, also known as “MAGA accounts,” first drew attention this spring as discussions of the president’s budget reconciliation bill ramped up.
The idea on its face seemed simple: Babies born between 2025 and 2028 would be given $1,000 by the federal government, which they wouldn’t be able to touch until they turn 18. Parents, employers, charities and other organizations can add extra money — up to $5,000 a year — on top of the federal government’s one-time contribution.
The idea has had strong support among some prominent Republicans in Congress, including U.S. Sen. Ted Cruz, of Texas, who is credited with bringing the idea to the president after hearing about it at a poker game.
If used to their full potential, proponents argue, the money could provide a significant launchpad for America’s youth.
“Decades of research has shown that giving children a financial head start profoundly impacts their long-term success. With these accounts, children will be much more likely to graduate from college, to start a business, to buy a home, and achieve lifelong financial stability,” Dell CEO Michael Dell said in a statement earlier this year.
The idea behind Trump Accounts isn’t new. For years, politicians in Congress, most notably New Jersey Sen. Cory Booker and Massachusetts Rep. Ayanna Pressley have promoted a bill called the American Opportunity Accounts Act, which sought to give each child in the country $1,000, with additional contributions each year working on a progressive scale. The bill is seen as a more traditional form of the wealth building proposal known as “baby bonds.”
Baby bonds have been proposed at various points in the past few years, with economists arguing they can help address wealth disparities in ways that more traditional financial advice cannot.
“We know that income, hard work, and savings behavior are not enough to achieve true financial independence for those who start with fewer resources,” said David Radcliffe, state and local policy director for the Institute on Race Power and Political Economy at the New School. “The power of baby bonds is the focus on the endowment itself, substantial seed capital for wealth building activities that will drive economic security.”
Traditionally, baby bonds programs focus on making larger investments for those at lower income levels, using government investment to help close the nation’s yawning racial wealth gap.
That federal money would be used is a given, says Radcliffe, who previously worked as a policy director for former Connecticut state treasurer Shawn Wooden. “One could argue, it’s through government design of policy over generations that has in many ways created the situation that we’re now in where certain groups, particularly people of color — black and Hispanic, indigenous folks — have been excluded from policies that have otherwise, you know, generated the wealth to create a middle class,” he said.
Trump accounts however, do something different. Rather than focus on wealth disparities, the accounts provide an equal investment for each child. The ability to save in the accounts then depends on how much money each child’s family can contribute: Wealthier families may have the resources to contribute more, while poorer families contribute less.
Federal policy experts focused on the wealth gap and youth saving say that this difference could create issues down the line.
“The reality for American families is that a third of them don’t have $2,000 in an emergency savings account,” said Madeline Brown, a senior policy associate at the Urban Institute. “So the idea that every family is going to be able to contribute to this type of program is just not borne out by the reality of the financial situation of many American families.”
In Connecticut, baby bonds focus on vulnerable
When Connecticut passed its first-in-the-nation baby bonds program in 2023, the focus was on investing in the state’s poorest families. That focus, Russell explained in a July interview with the Connecticut Mirror, is deeply intentional.
“If you look at most of the work that we’re doing in Connecticut, it’s about thinking about this more holistically, and thinking about it longer term,” he said. “And I think we’ve seen that in the need, frankly, to continue to invest in communities.”
As a result, the Connecticut program makes an investment that proponents argue is more progressive, giving money to low-income children that can be used once they turn 18 to pay for education, a down payment, or starting a business. The $3,200 investment could grow to anywhere between $10,000 to $24,000 according to the treasurer’s office.
Trump accounts meanwhile, could grow to just over $3,000 for families unable to add money, to more than $100,000 for families who can afford to max out the annual contribution each year.
Russell explains that with wealth disparities continuing to widen in the state, “it is really critical that we’re looking at real ways to address wealth inequality and truly lift people up.”
Connecticut’s baby bonds experiment is underway.
The state will continue to fund the program for the next decade. The treasurer’s office is currently working on an ambassador program that will provide additional resources to baby bonds-eligible communities, and also provide feedback to the state about what additional needs are.
And the idea is continuing to gain traction: Baby bonds proposals are currently being considered in more than a dozen other states.
Russell says that financial investment, whether through baby bonds, Trump Accounts, or another program, is just one aspect of addressing the needs of vulnerable communities.
“The economy is going to be stronger if we are investing in people who can participate, who can contribute,” he said. “This is about investing in the future workforce, about these resources going back into our communities.”
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
